The EU Foreign Subsidies Regulation (FSR) entered into force on 12 July 2023. The FSR allows the European Commission (Commission) to take action, in the M&A context, against potentially distortive subsidies granted by countries outside the European Union (EU) to companies active in the EU. The FSR establishes a pre-closing suspensory filing regime for acquisitions of “control” of targets with at least EUR 500 million in EU turnover, and where the parties to the transaction received in aggregate more than EUR 50 million in “financial contributions” from non-EU countries. Financial contributions include a very broad range of support measures provided by State bodies from non-EU countries. The filing obligation applies from 12 October 2023. However, reportable transactions signed on or after 12 July 2023 which have not closed before 12 October 2023 are subject to the filing obligation. Parties subject to the filing obligation will need to disclose information to the Commission relating to “financial contributions” they have received. The Commission will assess whether such financial contributions are distortive subsidies. The relevant information is not typically readily available or collated within companies. Therefore, companies will need to keep track of financial contributions received from non-EU countries.
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